SMB Employment Update: Furloughing Grants Extended to March 2021 – What Employers Need To Know

6th November 2020

The Chancellor announced yesterday that he is giving UK businesses “security through the winter” and extending the Coronavirus Job Retention Scheme (“CJRS”) until 31 March 2021.   It comes on the heels of the Chancellor’s announcement just three days ago that the CJRS was being extended but only until 2 December 2020.  Yesterday’s announcement represents a further four month extension.

As to the reasons for the further extension, the Chancellor stated that the economic effects of lockdown are much longer lasting for businesses than the duration of any actual restrictions.

How much do employers receive following this latest extension of the CJRS?

The CJRS will continue to cover up to 80% of employees’ current salaries for hours not worked up to a capped amount of £2,500 per month.

The CJRS remains open to all employers with a UK bank account and UK PAYE scheme, small or large, charitable or non-profit.

What costs will employers incur under this latest extension scheme?

Employers will still be responsible for paying employer National Insurance Contributions (NIC’s) and pension contributions in respect of a CJRS grant. The level of the grant and the Employer NIC’s and pension payments mirrors the CJRS rules in place since August 2020.

For an average claim, according to government guidance, employer NIC’s and pension contributions represent 5% of total employment costs.

As with the previous extension of the CJRS, employers are still able to top up employee wages above the scheme grant at their own expense if they wish.

Will the extended scheme allow for flexible furlough?

The CJRS will continue to offer flexible furlough options to businesses that need to furlough employees. This means that employers will be able to use the scheme for any amount of time and shift pattern, including furloughing employees for part-time unworked hours whilst paying them for part-time worked hours.

What about redundancy and termination?

Employers will be able to conduct a redundancy process whilst employees are furloughed and/or give notice of termination whilst an employee is furloughed.  Please see our previous article here for more detailed guidance on redundancy and termination of furloughed employees.

Can the scheme be used for employees who are off sick?

Employers can choose to furlough employees who are shielding or who have caring responsibilities due to Covid-19.

Furloughed employees who become ill must be paid at least Statutory Sick Pay (SSP). As under the CJRS previously, it is up to employers to decide whether to move furloughed employees onto SSP or to keep them on furlough, at their furloughed rate.

Clients should note the scheme is not intended for short term illnesses or those who are self-isolating.

Will the scheme stay the same until March 2021?

The Chancellor said yesterday that the level of wage support offered to employers would be reviewed in January 2021 and businesses may be asked to contribute more depending on how the UK economy is fairing.   It is therefore possible that government contributions will be reduced under the scheme in the new year.

What impact does this have on the Job Support Scheme?

As announced earlier this week, the Job Support Scheme has been postponed due to the extension of the CJRS.  All guidance on the Job Support Scheme has currently been withdrawn and it is expected that this scheme will open when the CJRS ends, as previously planned.

Have there been changes to any other financial support schemes?

The Job Retention Bonus –a £1,000 one-off payment to firms that had retained previously-furloughed staff until the end of January 2021 – will not be paid out in February 2020 as expected.

The Chancellor announced that instead of the Job Retention Bonus a new “retention incentive” would be deployed at an “appropriate time”.

It was also announced yesterday that there will be an increase to the self-employed grant, covering the period of November 2020 to January 2021, from 55% to 80% of trading profits.

In addition, businesses in England that are forced to close due to national or local restrictions will receive up to £3,000 per month. This grant is intended to support small to medium sized businesses in the retail, hospitality and leisure sectors to cover monthly rent.

The application deadline for coronavirus loan schemes has been extended, and the rules of the schemes have been amended to allow existing loans to be topped up where businesses have borrowed less than the maximum amount permitted.

Where can I find further advice and support?

Should you require any assistance with your employment arrangements during the Covid-19 pandemic, please do not hesitate to contact the co-head partners of our employment department.  Ewan Keen can be reached at 020 3206 2724 or  or Tamara Ludlow can be reached at 020 3206 2739 or